Partial Disposal of a Shareholding and Participation Deduction

Facts

At the beginning of the 2014 tax period, A AG held a 10.86% stake in B AG. On 30 April 2014, it sold a partial package of 3.14%, resulting in a book gain of around CHF 49.5 million. The tax authority denied the participation deduction for this gain, as the disposed shareholding was less than 10%. A AG appealed against this up to the Federal Supreme Court.

Considerations

The Federal Supreme Court confirmed the view of the lower instance. It stated that according to Art. 70 para. 4 lit. b DFTA 2007, the participation deduction on capital gains cumulatively requires a minimum holding period of one year, a minimum participation quota of 10%, and a minimum disposal quota of 10%. Since A AG only disposed of 3.14%, the minimum disposal quota of 10% was not met. The second half-sentence of Art. 70 para. 4 lit. b DFTA 2007, which provides for an exemption…